I am expecting the market to go lower at sometime today, even possibly touching the low point of today but after a retracement up again.

The range was 14632 and 14597.

I didn’t trade the 9-to-9 however. If the range is over 120 pips or so, the movement has already been too large for the day. Also, I can’t scale my trade to be small enough so that the hefty pip stop loss is a mere 5% of my trading account.

The top line is 14752 and the lower bar is 14549 which is around 200 points.. double of what I would like it to be approximately.

17th May

I just flew into Africa in the morning. However, a long would have been triggered and 30 pips would have been in the bag

18th May

It wasn’t easy to put on the trade today.. I was in a conference and had to fire up my email and put in the order. I had put in an order to buy at the high band and a sell at the other. When the first trade (buy) was triggered, I cancelled the short. The long made me 30 pips. Looking back on it, the short would have also made 30 points.

19th May

Another day that I wasn’t able to trade.. it looks like tomorrow I’m not going to be able to either. However, from going back through the charts, the long trade was initiate which would have been fruitful. A short at 14275 if I had left this order would have reached 14239 at the low.. another successful trade.

20th May

Could trade again this day but it would have been a short and it would have been profitable!

21st May

I am not sure if I would have traded today as the distance between the two lines was almost 100 pips. If I did, the first trade would have been a long which would have lost. I don’t think I would have set a 100 pip stop (way too big).. I may have set it at 50 pips but this would have been a loss. A short towards the downside would have yielded 30 pips.

My entry was at 1.5453, stop at 1.5423 and target 1.5483. The pullback was deeper than I had expected (I was within 3 points of being stopped out). However, the market resumed it’s uptrend and I got my 30 pips.  If I had traded the usual breakout, I would have got in long at 15470 or so and the market would have stopped short of my target by a couple of pips.

Now, the difficulty with trading like this is that I have not followed the system but made a profit. Us humans learn by trial and error but this situation has ‘encouraged’ me to disobey my trading system. This is rather dangerous as it reaffirms what is incorrect in trading. I know this may seem trivial but our subconscious is wired to keep doing what is good (in this case, make a profit) and avoid doing what isn’t good (lose money)… it is so ingrained into our subconscious so next time there maybe a strong temptation for me to just go and trade outside of the orginal system… especially since the system hasn’t faired well lately (and would have failed again today). Don’t underestimate trading psychology, people say that successful trading is 90% psychology and don’t overestimate your conscious mind power over your subconscious!

The FTSE100 obeyed some nice technical signals I was able to capitalise… not to it’s full potential but still, it’s nice when you get a perfect technical day.

The first thing was the previou low of around 4200 at 8.30am when the market tested the level and bounced to 4240.. it then started to fall and for an instant, I thought that we may see a break below this level and then significantly lower prices.. I wait for this to happen and the market did penetrate but didn’t go much lower.. it sorta stalled. Drilling into the 1 minute chart (see my diagram below), the chart made a double bottom and them moved above the level set at 8.30am. When a market fails to go below the previous low, this is a sign that the bears may have been exhausted. This, together with the double bottom pattern as the market went above 4200 was a buy signal. I got in at just above 4200 and rode it up to 4240 where I close it. However, the market continued to shoot up, more than 200 points higher from this level!! Ok, I missed out on the greater profits but it’s great when the technicals work to perfection.

I have read a lot of trading books and I think the key to becoming a trader is firstly trading psychology. This means controlling the emotional aspects of your trade when real money is on the line. You can read about trading psychology and what it is etc in books and be aware of it and then get a view when your trading psychology falls thin but this isn’t the same as actually mastering your trading psychology so that it is optimal for trading. Trading psychology takes time to get right, you will need to experience first hand what it feels like to win money, to lose money, to get frustrated. You will experience fear when the market is going against you and greed, the need to take a profit early when the market is going your way. Mastering ones trading psychology can take years….

However, once you have reached a level where your mind is ready. You will need to find some trading setups which you will feel comfortable with. When I say comfortable, I mean that some people will prefer different timeframes for trading.. some people like to make many trades in a day (day traders), some can hold for hours, days (position traders) etc.

I found a fantastic website with many trading set ups today which I thought I would share with you all:

http://www.trading-naked.com/Setups.htm

Just one more note, on the website there is a note which says:

Pick One, Master It, Be Consistently Profitable, Do it Now

The key here is being a specialist and mastering just one setup. You may think that if you learn them all, you be bucks in as you’ll have all these setups. This is never the case, I’m sure you’ve heard the saying “Jack of All Trades, Master of None”… this is very true of the markets, the markets are not very forgiven if you are not the best at it, you will lose money… this is another element of trading psychology.